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Tuesday, July 16, 2024 | Back issues
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Turkish Gold Trader Admits to Multimillion Bribes

Confessing to violating U.S. sanctions against Iran, a Turkish gold trader told a jury on Wednesday that he paid his country’s former economic minister more than $50 million in bribes.

MANHATTAN (CN) – Confessing to violating U.S. sanctions against Iran, a Turkish gold trader told a jury on Wednesday that he paid his country’s former economic minister more than $50 million in bribes.

“I am thinking that I paid bribes in the amount of 45 to 50 million euros,” said Reza Zarrab, taking the stand this morning in Manhattan under the terms of secret plea deal he reached last month with the U.S. government.

A wealthy businessman and onetime ally of Turkish President Recep Tayip Erdogan, 34-year-old Zarrab claims to have paid the bribes in 2012 to Turkey’s then-economic minister Zafer Caglayan.

He also told the court Wednesday about other funds he paid Caglayan: $7 million in U.S. dollars and other money in Turkish lira.

Erdogan was prime minister at the time, becoming the president of Turkey two years later. Though he has not been charged in connection to the sprawling corruption case, Erdogan is among several political heavyweights whose reputations Zarrab’s testimony is expected to mar.

Prosecutors here indicted Zarrab alongside Caglayan and Mehmet Atilla, a 47-year-old bank manager at the state-run Halkbank in Turkey.

Wearing a tan prison uniform, Zarrab stepped down from the witness stand at one point during his marathon testimony on Wednesday to draw a diagram for the jury to understand how the alleged laundering scheme worked.

Zarrab marked up nearly every corner of the poster board – which spanned roughly from his waist to above his head in height and more than his body length in width – with a complex model of at least 10 transactions.

He described this system as a means to export gold in exchange for Iranian oil through a series of front companies and false documentation.

“Did the gold ever wind up in Iran?” Assistant U.S. Attorney Sid Kamaraju asked him.

“The gold would never go to Iran,” Zarrab replied through a Turkish translator. “The gold would go to our office in Dubai.”

Zarrab said massive amounts of money funneled through this circuitous system. When asked how much, he estimated “a few billion” euros, and he said that Atilla knew about these illicit dealings.

Zarrab testified his star power made finding a partnership for such financial transactions difficult.

“Because my wife was a famous artist in Turkey,” Zarrab said, referring to the pop singer Ebru Gundes, “I was a person who was in the public eye all the time.”

U.S. prosecutors have charged Caglayan with six counts of bank fraud, money laundering, sanctions violations and conspiracy to defraud, in connection with an alleged scheme to help Zarrab funnel money to Iran.

In October, Zarrab secretly pleaded guilty to seven charges: defrauding the United States, sanctions violations, money laundering, bank fraud, related conspiracy and bribing a U.S. federal prison guard.

During opening arguments on Tuesday, Atilla’s defense attorney Victor Rocco said that Zarrab paid off a prison guard to get access to alcohol, drugs and women.

Zarrab only partially confirmed that allegation during his testimony Wednesday.

"I bribed the prison guard to bring me alcohol and to let me use his cellphone,” he said.

The U.S. Bureau of Prisons inmate database shows that Zarrab has been released since Nov. 8, fueling rumors that he has resumed his former playboy life in a hotel.

But Zarrab insisted that he is still in U.S. custody, with his movements heavily restricted.

After proceedings ended for the day, U.S. District Judge Richard Berman questioned the need for Zarrab to testify in his prison uniform. The prosecutor said he would ask the witness whether he would prefer to wear civilian clothes when he returns to the stand on Thursday.

Zarrab's testimony has received intense attention in Turkey, where Erdogan's opponents see it as a reckoning over a 2013 corruption scandal that implicated several top people in the Turkish government.

The Turkish prosecution since disappeared, only for U.S. law enforcement to take up the case years later upon Zarrab's arrest in March 2016.

But Zarrab's case is also raising eyebrows in the United States, where multiple outlets are reporting he may be cooperating in a probe of former White House national security adviser Michael Flynn.

As part of his probe of Russian interference in the 2016, the Department of Justice’s special counsel Robert Mueller is reportedly investigating whether Trump’s former national-security adviser Michael Flynn considered kidnapping a Turkish dissident living in Pennsylvania and delivering him to Erdogan in exchange for $15 million.

NBC reported that Mueller may also be interested in whether Turkish government officials ever sought Flynn's help in winning Zarrab's release from prison.

Zarrab has not testified to any of these U.S. political ripples of his case so far, and he is expected to continue testifying through Friday.

Categories / Criminal, Trials

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